Bank of America latest major lender to face REO-management discrimination charges
(9/27/2012) - Bank of America, this week, became the third large bank to get slapped with a federal complaint for alleged discrimination in handling foreclosed properties, revealing a continuing pattern of discrimination that has spanned the full housing boom-to-bust era.
The National Fair Housing Alliance's (NFHA) complaint (joined by a host of member agencies around the nation), filed the U.S. Department of Housing and Urban Development (HUD), stems from a scathing undercover report "The Banks Are Back Our Neighborhoods Are Not."
The report includes a litany of incidents allegedly revealing that banks take better care of REOs (real estate owned or repossessed properties) in white neighborhoods than REOs in minority neighborhoods.
The investigation of 373 BofA-owned or managed foreclosed homes said the bank engaged in a "systemic practice" of poorly maintaining and marketing REOs in racial minority communities, while doing a far better job maintaining and marketing REO properties in predominantly white communities.
NFHA investigators evaluated BofA properties in eight metropolitan areas - Atlanta, GA; Dallas, TX; Dayton, OH; Grand Rapids, MI; Miami/Fort Lauderdale, FL; Oakland/Richmond/Concord, CA; Phoenix, AZ, and metropolitan Washington, DC.
The investigation examined properties to root out incidences of 39 different types of maintenance or marketing deficiencies, including broken windows and doors, water damage, overgrown lawns, no for sale sign, trash on the property, and other problems.
Shanna L. Smith, president and CEO of the NFHA said communities of color continue to experience foreclosure rates twice those of white communities and their communities continue to suffer a greater share of mishandled REO homes.
NFHA said, BofA, notified of the report's findings in April, allegedly has a history of failing to correct REO problems.
New face of redlining
"Bank of America has been on notice of its failure to maintain REOs since the summer of 2009, yet has made no improvement in addressing racial disparities in the maintenance and marketing of its bank-owned homes," Smith said.
She said in Oakland, CA, 72 percent of Bank of America REO properties in communities of color were allegedly missing a "for sale" sign, as well as 80 percent in Washington, DC and Atlanta, GA, and 86 percent in Phoenix, AZ.
"Without a for-sale sign, for example, potential homebuyers and neighbors simply don¹t know the home is available. Also, if there are unauthorized occupants or storm damage, neighbors have no one to call. With a for sale sign, neighbors can call a real estate agent to report these kinds of problems," Smith said.
In Grand Rapids, MI, 97 percent of all BofA REOs in communities of color had substantial amounts of trash, as well as 69 percent in Dallas, TX, 71 percent in Phoenix, AZ, 77 percent in Oakland, CA, and 70 percent in Washington, DC.
Regular maintenance can correct a problem that creates neighborhood blight, makes a home unappealing to buyers and can be a potential health and safety hazard.
Pattern of fair housing abuses
Smith said, while BofA has access to the Federal Reserve Board's discount window to borrow at nearly zero percent and has reported healthy profits, it fails to renovate, maintain or properly market homes it owns in African American and Latino neighborhoods.
"This disregard and disrespect for communities of color will not be tolerated," she said.
NFHA's report offers evidence that the same banks that peddled unsustainable loans to communities of color - which contributed to the current housing crisis - also practiced abusive foreclosure tactics and are now victimizing some people for a third time by effectively, allegedly leaving neighborhoods to crumble under the weight of foreclosures.
This while Republicans are clamoring on election platforms to roll back regulations that are just beginning to put a dent in mortgage lenders' abusive practices of victimization and discrimination.
NFHA also filed HUD administrative complaints against Wells Fargo and U.S. Bancorp in April 2012. Both complaints remain pending while HUD investigates.
DOJ cracking down
The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, disability or familial status, as well as the race or national origin of residents of a neighborhood. This law applies to housing and housing-related activities, which include the maintenance, appraisal, listing, marketing and selling of homes.
The U.S. Department of Justice's (DOJ) Civil Rights Division website is riddled with recent discrimination complaints, suits and settlements involving large lenders that write mortgages including:
The now defunct Countrywide Financial agreed to a $335 million settlement, the largest fair lending settlement in DOJ history, for charging more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending.
Wells Fargo, in the second largest fair lending settlement in DOJ history, agreed to $175 million in restitutions for steering approximately 4,000 African-American and Hispanic wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans.
Bank of America agreed to settle allegations by the federal government that the financial institution discriminated against mortgage loan applicants with disabilities by asking them to provide medical information from a doctor.
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